Business

SaaS Magic Number Calculator

How efficiently sales spend turns into recurring revenue.

Enter your values

ARR at the start of the quarter($)

Enter the arr at the start of the quarter in $.

ARR at the end of the quarter($)

Enter the arr at the end of the quarter in $.

Prior quarter sales and marketing spend($)

Enter the prior quarter sales and marketing spend in $.

Gross margin(%)

Enter the gross margin in %.

Results update instantly as you type — no submit needed. Your values are remembered on this device, and the shareable link reopens the calculator with exactly these numbers.

Results

Magic number: 1.33
Gross-margin adjusted: 1.07
New ARR added: $450,000.00
Annualised new ARR: $1,800,000.00
Implied CAC payback: 11.3 months
Verdict: Efficient — push harder on spend
Quarterly growth: 10.7%

Quick answer

Magic number = (this quarter ARR − last quarter ARR) × 4 ÷ prior quarter sales and marketing spend. Above 0.75 means it pays to spend more.

Magic number = ΔARR × 4 ÷ prior S&M spend

At a glance

What it does	How efficiently sales spend turns into recurring revenue.
Category	Business
Inputs needed	ARR at the start of the quarter, ARR at the end of the quarter, Prior quarter sales and marketing spend, Gross margin
Main output	Magic number
Formula	Magic number = ΔARR × 4 ÷ prior S&M spend
Cost	Free — no sign-up, no download

How to use the SaaS Magic Number Calculator

1Enter ARR at the start and end of the quarter.
2Enter the sales and marketing spend from the prior quarter.
3Add gross margin for the adjusted version.

Inputs explained

ARR at the start of the quarter($): Enter the arr at the start of the quarter in $.
ARR at the end of the quarter($): Enter the arr at the end of the quarter in $.
Prior quarter sales and marketing spend($): Enter the prior quarter sales and marketing spend in $.
Gross margin(%): Enter the gross margin in %.

Worked example

Using the values the calculator loads with:

Inputs

ARR at the start of the quarter4200000 $
ARR at the end of the quarter4650000 $
Prior quarter sales and marketing spend1350000 $
Gross margin80 %

Results

Magic number1.33
Gross-margin adjusted1.07
New ARR added$450,000.00
Annualised new ARR$1,800,000.00
Implied CAC payback11.3 months
VerdictEfficient — push harder on spend
Quarterly growth10.7%

Frequently asked questions

Why use the prior quarter's spend?

Sales and marketing spend takes a quarter to convert into revenue, so lagging the spend matches cause to effect.

Is magic number better than CAC?

It is a portfolio-level view that needs no per-customer data, which makes it useful for boards. CAC payback is better for channel-level decisions.

What do I need to enter into the SaaS Magic Number Calculator?

Just 4 values: arr at the start of the quarter, arr at the end of the quarter, prior quarter sales and marketing spend, gross margin. Every field starts with a realistic example, so you can change one number at a time and watch the result update instantly.

How does the SaaS Magic Number Calculator work out the answer?

Magic number = (this quarter ARR − last quarter ARR) × 4 ÷ prior quarter sales and marketing spend. Above 0.75 means it pays to spend more. It applies the formula Magic number = ΔARR × 4 ÷ prior S&M spend and shows the working so you can check each step by hand.

Is the SaaS Magic Number Calculator free, and do I need an account?

It is completely free with no sign-up, no download and no usage limit. Everything is calculated in your browser, so the numbers you type never leave your device.

Results are estimates for general information. For medical, legal, structural or financial decisions, confirm with a qualified professional.